Armenia teetering on verge of insolvency

By Azernews

By Rashid Shirinov

The Armenian economy remains mired in swamp of stagnation.

Armenians have already been warned that this year will be quite tough for them as the government has failed to prevent social, economic and financial declines.

As the economical situation in the country worsens each day, the number of low-income and poor people, who make up the majority of the Armenian population, increases as well.

Local experts note that the country's no-growth economy is going to collapse.

Armenia’s national debt is close to $6 billion – over 54 percent of the GDP. In 2017 it is expected to hit $6. 277 billion. The public debt ratio to GDP will increase from 54.1% in 2016 to 55.1% in 2017.

Back in 2007, only 2 percent of the GDP was directed to service the national debt in 2007, now the number is 7-8 percent, and this figure will reach 30 percent in three years, according to experts.

Moreover, Armenia has huge problems in paying off the taken debts, which is mainly linked with a state-level corruption in the country. A much-touted anti-corruption drive in Armenia was launched in 2015 and the Anti-Corruption Council established, but the campaign was doomed to failure from its early state as leading government members of the committee – including its chair, the prime minister, were accused of corruption. 

Experts say that Armenia should achieve some 7-8 percent of GDP growth every year to avoid a possible default. Currently, Armenia's GDP is about $10 billion, while the national debt rises daily. If Armenia continues to take loans, the country can approach the critical level of the debt/GDP ratio, and thus become an insolvent country.

Thus, if the Armenian authorities do not change their politics, the country’s economy will collapse, further worsening the living conditions of people living in poverty.